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2.
Income tax system
for residents of Saint-Martin
Principle
Saint-Martin tax regulations identify several categories
of income or profits such as “property income” (income
from rental properties) or “wages and salaries” (remune-
ration derived from employment).
The determination of net income for each category is
made according to rules specific to each category.
Hence, the gross income of employees is reduced by
compulsory social security contributions, plus any benefits
in kind. Net income for that category is then obtained
after deducting professional expenses that are either
fixed at a flat rate of 10%, or determined on the basis
of a statement of actual justified costs.
Category outcomes are then aggregated to determine
the total net income, which can potentially be reduced
by certain expenses such as alimony.
Income tax is calculated by application to total net
household
taxable income of the progressive scale
adjusted according to the family quotient.
The calculated income tax can then be reduced by a
set of tax deductions or tax credits; the effects of the
family quotient may also be capped.
Family quotient
The family quotient takes into account the family situation
of taxpayers and consequently reduces the progressive
impact of income tax.
It works by assigning to each tax household a number
of units depending on the number of people associated
with the household.
The single taxpayer, divorced or widowed, without
dependent children has a single unit.
The married taxpayer without dependent children has
two units.
The married taxpayer with a dependent child has two
and a half units; two children entitle them to three units;
and they are entitled to four units for three children, and
so on, each dependent from the third one on qualifying
them for an additional unit.
The effective tax rate is calculated based on the
taxable
income of the tax household divided by the num-
ber of units corresponding to the family quotient
of the taxpayer. The progressive scale of tax for one
unit of income is then applied to the amount of each
unit of income.
The resulting figure is then multiplied by the number of
units to obtain the total amount of gross tax.
Calculation of the tax
For the purposes of income tax for the year 2014, the
progressive rate of income tax of the
Collectivité
of
Saint-Martin for one unit is as follows:
Fraction of taxable income
Rate
Not exceeding €6,041
0%
From €6,041 to €12,051
5.5%
From €12,051 to €26,764
14%
From €26,764 to €71,754
30%
More than €71,754
41%
Gross tax can be adjusted by application of the capping
effects of the family quotient, the tax benefit cap per
half-unit being added to the two units for married tax-
payers, hence amounting to €2,367 for 2014 incomes.
Gross tax gives rise to an overall deduction of 40%,
up to a maximum of €6,700.
Other tax deductions
The amount of tax calculated can also be further reduced
by a set of special tax deductions such as:
uu
tax credit for amounts paid to an employee in the home;
uu
or tax credit for childcare costs.
Tax credit enabling double taxation to be
offset, even in the absence of a tax treaty
The
Collectivité
of Saint-Martin has not entered into any
treaties against double taxation with States or territories
other than the French State, even though tax residents
in Saint-Martin may receive their income from a source
outside the
Collectivité
and may be taxed by the territory
or State in which the income is derived (this is the case
for revenue originating in the United States, etc.).
In order to avoid double taxation of these incomes that
have to be included in the tax base in Saint-Martin and
declared as such,
Saint-Martin tax rules provide a
unilateral tax credit mechanism
(not treaty) with
respect to tax paid by a taxpayer living in Saint-Martin to
a State or territory outside Saint-Martin under a positive
income that has its source in that State or territory.
27
MARCH 2015 EDITION
TAX INCENTIVES FOR YOUR EMPLOYEES